Mitchells & Butlers Plc · LSE:MAB
Mitchells & Butlers — H1 FY2010 Earnings Presentation
33 slides from Mitchells & Butlers's earnings presentation, May 19, 2010
Slide 1: John Lovering, Chairman
John Lovering Chairman Half Year Results – 19 May 2010
Slide 2: Jeremy Townsend, Finance Director
Jeremy Townsend Finance Director Half Year Results – 19 May 2010
Slide 3: Key Messages
Key Messages Stable like-for-like sales growth Further gross margin improvement Tight cost control Significant profit growth Continued net debt reduction Well positioned for growth 3
Slide 4: Financial Highlights
Financial Highlights 28 weeks ended 10 April 2010 Growth Revenue £1,037m 1.3% EBITDA* £225m 7.7% Operating profit* £156m 12.2% Net Interest* £(83)m 9.8% Profit before tax* £73m 55.3% EPS* 13.0p 54.8% Strong profit uplifts * Before exceptional items and other adjustments 4
Slide 5: Like-for-Like Sales Growth
Like-for-Like Sales Growth 1.8%* 1.6% 1.0% FY 08 FY 09 1H FY 10 Continuing stable like-for-like trends *33 weeks to 15 May 5
Slide 6: Like-for-Like Sales Growth
Like-for-Like Sales Growth % FY 09 FY 10 Total Wk 1-33 Food 3.1% 4.3% Drink 1.8% 0.3% Other (8.7%) (2.3%) Total 1.6% 1.8% Good growth in food and drink 6
Slide 7: Key Retail Operating Statistics
Key Retail Operating Statistics Gross margin up 0.9% points Cash gross margin up 2.8% Outlet staff costs 24.9% of sales Operating margin up 1.6% points Gross margin improvement and tight cost control 7
Slide 8: H1 Retail Operating Profit Movement
H1 Retail Operating Profit Movement +14 £158m* Trading H1 FY10 +4 +11 Expansionary (10) Capital Energy £139m* Regulatory deflation FY09 Costs Good trading and cost deflation drive profits increase * Before exceptional items and other adjustments 8
Slide 9: Outlook for H2 Costs
Outlook for H2 Costs Similar regulatory cost increases Some inflationary cost rises in H2 Efficiency gains now projected at £25m Small increase in closure and pre-opening costs Relatively benign inflation environment 9
Slide 10: Cash Flow (a)
Cash Flow (a) H1 FY10 £m EBIT 156 Depreciation & amortisation 69 EBITDA 225 Working capital / non cash items 5 Capital expenditure (68) Disposals 21 Additional pension contributions (15) Operating Cash Flow after Net Capex 168 10
Slide 11: Cash Flow (b)
Cash Flow (b) H1 FY10 £m Operating cash flow after net capex 168 Net interest paid (74) Tax paid - Issue of share capital 2 Net Cash Flow 96 11
Slide 12: Group Debt and Outstanding Facilities
Group Debt and Outstanding Facilities Apr 09 Sept 09 Apr 10 £m £m £m Securitisation debt (2,345) (2,319) (2,303) Cash / other 120 102 115 Unsecured drawings (411) (383) (325) Net debt (2,636) (2,600) (2,513) Unsecured facility £550m £550m £425m Headroom +£139m +£167m +£100m Cash inflows reduce net d
Slide 13: Pension Scheme
Pension Scheme IAS 19 pension deficit £147m Triennial valuation agreed Deficit for actuarial purposes agreed at £400m Additional contributions increased from £24m to £40m Flexibility to execute strategic plans Funding agreement removes balance sheet uncertainty 13
Slide 14: Balance Sheet
Balance Sheet Net debt : EBITDA* 5.7x Book gearing** 71% Interest cover† 1.9x Fixed charge cover†† 2.3x Property value £4.5bn Strengthened balance sheet from significant debt reduction EBITDA is before exceptional items and other adjustments * MAT ** Net debt / (net assets + net debt) † Operating Pr
Slide 15: Summary
Summary Strong margin and cost management Significant profit growth Net debt reducing Capital recycling into expansion brands Strong financial platform Well positioned for growth 15
Slide 16: Adam Fowle, Chief Executive
Adam Fowle Chief Executive Half Year Results – 19 May 2010 16
Slide 17: Overview
Overview Gross margin improvements Delivering spend per head and volume increases Capital expenditure and investment returns Progress against strategic plan 17
Slide 18: Retail H1 Performance
Retail H1 Performance FY09 FY10 H1 H2 H1 Total sales growth* 2.9% 2.3% 1.3% Like-for-like sales 1.2% 2.1% 1.8% Operating margin % 13.6% 17.2% 15.2% Change in operating margin % (3.2)% pts (1.1)% pts +1.6% pts Change in EBIT (16.8)% (2.4)% 13.7% Performance trend maintained into FY10 *Includes SCPD 1
Slide 19: MAB Market Outperformance by Value
MAB Market Outperformance by Value Food Drink Continued market outperformance * 12 month moving average total Sources: Crest data, the NPD Group; Nielsen CGA 19
Slide 20: Food Spend per Head (incl. VAT)
Food Spend per Head (incl. VAT) 4.4% H2 FY09 Q1 FY10 Q2 FY10 (2.1)% (6.0)% Increasing food spend per head H2 FY09=weeks 34-52; Q1 FY10=weeks 1-16; Q2 FY10=weeks 17-28 20
Slide 21: Food Cash Gross Margin Increase
Food Cash Gross Margin Increase +4.2% COGs H1 FY10 +2.2% Spend per +3.9% head Volumes +9.4% LFL price (0.9)% H1 FY09 Significant uplifts in food cash margins 21
Slide 22: Drink Cash Gross Margin Increase
Drink Cash Gross Margin Increase +0.5% +3.0% Mix LFL price +0.9% H1 FY09 H1 FY10 COGs (1.8)% (0.8)% Volume (1.8)% Improved margins drive profits performance 22
Slide 23: Brands Driving Sales Growth
Brands Driving Sales Growth Broadcast Advertising Requirements Broad appeal & high guest satisfaction Brand name recognisable by current & future users Distinctive consumer offer Wide brand distribution Reduced reliance on promotional offers 23
Slide 24: 'The Great Roast Debate'
‘The Great Roast Debate’ Digital: Facebook slogan “Join The Debate” - 110k active participants Radio advertising Press partnership with Daily Mirror TV advertising 24
Slide 25: Toby Carvery Performance
Toby Carvery Performance Performance compared with last promotional offer Meals up 2.3% Spend per meal up 70p Return on investment over 100% Significant potential to drive profitable sales 25
Slide 26: Brands by Expansion Focus
Brands by Expansion Focus Expand Maintain Selective Active Premium Bars & Ember Miller & Vintage Browns Country venues Inns Carter Inns Dining Metro Community Town Professional All Bar One Harvester Toby Carvery pubs pubs s Hollywood Crown Sizzling Pub Scream Nicholson’s O’Neill’s Bowl Carveries Com
Slide 27: Performance by Brand Category
Performance by Brand Category Maintain Expand Same outlet sales growth (1.7)% 3.0% AWT per pub * £16.8k £22.1k Food AWT per pub * £2.9k £11.3k EBITDA per pub * £197k £267k EBITDA % * 22.6% 23.2% Performance supports focus on Expand brands * Annualised figures 27
Slide 28: Operational Delivery
Operational Delivery Productivity up 1.8% Guest satisfaction up 3% Food quality up 2% 2,500 NVQs completed or in progress in first half Non-drink supply chain review Continuing focus on productivity and efficiency 28
Slide 29: Capital Programme
Capital Programme Last 2 years investments - 66 conversions to expansion brands - Over 25% EBIT return - Over 30% EBITDA return FY10 £50m expansionary capital Maintenance spend continues to be more focused Strong investment track record 29
Slide 30: Strategic Review Progress
Strategic Review Progress Targeted area Progress Reshape to food-led business 9 Withdrawal from price sensitive drinks-led pubs 9 Improve operating margins 9 Improve returns on capex 9 Address pension funding & reduce net debt 9 Operating and property disclosure Ongoing Address incentive schemes and
Slide 31: Outlook
Outlook Uncertainty over government fiscal policy Increased pressure on discretionary spending likely Cost pressures currently stable LFLs continuing strongly Comparable margin uplift more challenging in H2 Challenging market but increasing confidence 31
Slide 32: Summary
Summary Strong brands drive sales and margin improvements Financial stability underpins platform for growth Strategic plans being implemented Significant potential within existing estate Development of further expansion plans underway Significant potential for future growth 32
Slide 33: Questions & Answers
Questions & Answers Half Year Results – 19 May 2010 33
Mitchells & Butlers — H1 FY2010 Earnings Presentation on 6ix